Activity in Auckland’s entry-level commercial property market remains buoyant, with investors snapping up numerous properties in the sub-$3 million range at auction in recent weeks.
Two suburban retail investments in Ellerslie and Te Atatu Peninsula sold under the hammer in the Colliers International auction room on Tuesday.
The first property at 129 Main Highway, in the heart of Ellerslie Village, sold for $2,575,000, at a yield of 4.91 per cent.
The deal was brokered by Logan Roach, Gareth Fraser and Charlie Oscroft of Colliers International’s Auckland Investment Sales team.
Roach says the fully leased property made for an attractive investment, offering split-risk income from a very strong tenant mix.
“The property comprises two buildings occupied by five tenants, three on newly signed leases, with a weighted average lease term of four years.
“It sits on a 458sq m site with Business Town Centre zoning, providing an add-value opportunity to redevelop the site in future.
“The combination of a superb location, favourable zoning, split-risk income and future potential all made for a compelling investment proposition.
“This was reflected in the auction room on the day, with the property receiving 21 bids before selling under the hammer.”
The second property at 568 Te Atatu Road, Te Atatu Peninsula, sold for $1.6m at a yield of 4.85 per cent.
Gow says the property is well located on a main arterial with a high-profile position next to Te Atatu Peninsula’s main roundabout.
“This area is tightly held by owner-occupiers and long-term investors with open market listings rarely coming available.
“The property comprises a single-level building occupied by a Hospice shop and takeaway restaurant, with market rental reviews on both leases.
“It sits on a 492sq m freehold site with a car park accessed via Taikata Road, providing great development potential in the long term.”
Gareth Fraser, Auckland Director of Investment Sales at Colliers, says suburban retail investments are popular in the current environment.
“The ‘shop local’ ethos has really taken off, with residents rallying behind neighbourhood businesses.
“As a result, we’re seeing strong interest in strip retail assets, particularly with multiple tenants providing split-risk income.
“The very hot residential property market has also generated interest in entry-level commercial properties, as investors find themselves priced out by stiff competition for housing.
“As a result, we expect investors to remain active in the suburban commercial property market, particularly in the $1.5m to $2.5m range.”
This week’s sales come within weeks of two other properties selling within the same price range at auction.
A 1,113sq m mixed-use freehold property at 518 Ellerslie-Panmure Highway, Mt Wellington, sold under the hammer with vacant possession for $1.62 million.
The deal was transacted by Roach with Associate Director Jonathan Lynch of Colliers’ Auckland Investment Sales team.
At the same auction, a 919sq m vacant development site at 8 Walmer Road, Pt Chevalier, sold under the hammer for $2.25 million.
The freehold property is zoned Business Town Centre, allowing for intensive redevelopment up to 18m in height.
The deal was brokered by Lynch with colleague Hamish Paterson.